Financial Statements And Dividend Announcement For The Half Year Ended 31 December 2015

Transcription

1 IPS SECUREX HOLDINGS LIMITED (Company Registration No.: H) (Incorporated in the Republic of Singapore) Financial Statements And Dividend Announcement For The Half Year Ended 31 December 2015 This announcement has been prepared by IPS Securex Holdings Limited (the Company and, together with its subsidiaries, the Group ) and its contents have been reviewed by the Company s Sponsor, United Overseas Bank Limited (the Sponsor ) for compliance with the relevant rules of the SGX-ST. The Sponsor has not independently verified the contents of this announcement. This announcement has not been examined or approved by the SGX-ST. The Sponsor and the SGX-ST assume no responsibility for the contents of this announcement, including the correctness of any of the statements or opinions made or reports contained in this announcement. The contact persons for the Sponsor are Mr Khong Choun Mun, Managing Director, Equity Capital Markets and Mr David Tham, Senior Director, Equity Capital Markets, who can be contacted at 80 Raffles Place, #03-03 UOB Plaza 1, Singapore , Telephone: PART I - INFORMATION REQUIRED FOR ANNOUNCEMENT OF HALF YEAR RESULTS 1(a) An income statement and statement of comprehensive income, or a statement of comprehensive income, for the group, together with a comparative statement for the corresponding period of the immediately preceding financial year. Group Unaudited Unaudited Increase/ 1H2016 1H2015 (2) (Decrease) S$ S$ % change Revenue 6,963,162 5,777, Cost of sales (3,605,719) (2,913,604) 23.8 Gross profit 3,357,443 2,863, Other operating income 194, ,691 (34.2) Administrative expenses (2,404,492) (2,089,438) 15.1 Other operating expenses (18,181) (14,522) 25.2 Finance costs (20,027) (12,459) 60.7 Profit before income tax 1,109,262 1,042, Income tax expense (107,530) (132,426) (18.8) Profit for the period, representing total comprehensive income for the period 1,001, , (2) 1H2016 refers to the half year ended 31 December H2015 refers to the half year ended 31 December Page 1

2 The net profit attributable to shareholders of the Company includes the following (charges)/credits: Group Unaudited Unaudited Increase/ 1H2016 1H2015 (Decrease) S$ S$ % change After charging: Depreciation of plant and equipment (432,815) (189,031) Finance costs (20,027) (12,459) 60.7 Inventories written off - (126) NM Under provision of income tax in respect of prior year (109) - NM and crediting: Foreign exchange gain 66, ,511 (54.2) Reversal of allowance for inventories obsolescence - 98,887 NM Interest income 3, Government grants and subsidies 19,059 21,111 (9.7) NM denotes not meaningful. Page 2

3 1(b)(i) A statement of financial position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year. Group Company Unaudited Audited Unaudited Audited As at As at As at As at ASSETS S$ S$ S$ S$ Current assets Cash and cash equivalents 2,318,245 4,768,941 1,509,633 2,479,364 Trade receivables 10,981,142 8,054, Other receivables 1,080, ,276 1,105,798 2,187,541 Loan to subsidiary corporation - - 4,543,461 4,149,654 Inventories 289, , Total current assets 14,670,308 14,015,782 7,158,892 8,816,559 Non-current assets Investment in subsidiary corporations - - 3,000,199 3,000,199 Plant and equipment 4,399,170 4,803, Long term trade receivables 1,340,342 1,340, ,739,512 6,144,113 3,000,199 3,000,199 Total assets 20,409,820 20,159,895 10,159,091 11,816,758 LIABILITIES AND EQUITY Current liabilities Trade payables 6,074,564 5,409, Other payables 1,345,618 1,238, , ,017 Finance lease 213, , Borrowings 500, , Income tax payable 149,439 92, Total current liabilities 8,283,314 7,751, , ,017 Non-current liabilities Finance lease 182, , Deferred tax liability 353, , , , Capital and reserves Share capital 9,405,906 9,405,906 9,405,906 9,405,906 Capital reserves (589,999) (589,999) 210, ,000 Accumulated profit 2,774,483 2,987, ,047 1,694,835 11,590,390 11,803,658 9,877,953 11,310,741 Total liabilities and equity 20,409,820 20,159,895 10,159,091 11,816,758 Page 3

4 1(b)(ii) In relation to the aggregate amount of the group s borrowings and debt securities, specify the following as at the end of the current financial period reported on with comparative figures as at the end of the immediately preceding financial year: As at Secured Unsecured Secured Unsecured Group S$ S$ S$ S$ Amount repayable in one year or less, or 713,693-1,011,027 - on demand Amount repayable after one year 182, , ,894-1,300,743 - Details of the collaterals: The Group s borrowings are secured by corporate guarantees provided by IPS Securex Holdings Limited. The Group s finance leases are secured by the respective plant and equipment under the leases. Page 4

5 1(c) A cash flow statement (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year. Operating activities Unaudited 1H2016 Unaudited 1H2015 S$ S$ Profit before income tax 1,109,262 1,042,954 Adjustments for: Group Interest income (3,878) (754) Finance costs 20,027 12,459 Depreciation of plant and equipment 432, ,031 Inventories written off Reversal of allowance for inventories obsolescence - (98,887) Net foreign exchange loss 45,305 67,856 Operating cash flows before working capital changes 1,603,531 1,212,785 Trade receivables (2,926,298) 1,693,828 Other receivables (565,964) (393,704) Inventories 405,311 97,760 Trade payables 664,765 (510,994) Other payables 108,059 (474,210) Cash (used in)/ generated from operations (710,596) 1,625,465 Income tax paid (11,211) (185,294) Interest received 5, Net cash (used in)/from operating activities (716,629) 1,440,597 Investing activities Purchase of plant and equipment (47,785) (2,016,177) Net cash used in investing activities (47,785) (2,016,177) Financing activities Proceeds from issuance of shares, net of issuance costs - 2,517,741 Dividends paid (1,215,000) - Interests paid (21,128) (11,358) Proceeds from bank borrowings - 600,000 Repayments of bank borrowings (300,000) - Repayments of finance leases (104,849) (34,227) Net cash (used in)/from financing activities (1,640,977) 3,072,156 Net (decrease)/increase in cash and cash equivalents (2,405,391) 2,496,576 Effect of exchange rate changes on the balance of cash held in foreign currencies (45,305) (67,856) Cash and cash equivalents at beginning of the period 4,768,941 4,531,440 Cash and cash equivalents at end of the period 2,318,245 6,960,160 Cash and cash equivalents in the Group's cash flow statements comprise the following: Cash at bank and on hand 2,318,245 4,960,160 Fixed deposits - 2,000,000 2,318,245 6,960,160 In 1H2016, the Group acquired plant and equipment with an aggregate cost of S$47,785 (1H2015: S$2,654,728) of which S$Nil (1H2015: S$638,551) was acquired by way of finance leases. Cash payments of S$47,785 were made in 1H2016 to purchase office equipment such as computers and software (1H2015: S$2,016,177 were made to purchase equipment relating mainly to the Group s Alert Alarm Systems in respect of the HDB Project (as defined and disclosed in the Company s offer document dated 20 June 2014 in connection with its initial public offering (the IPO ) and listing on Catalist). Page 5

6 1(d)(i) A statement (for the issuer and the group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year. Statement of changes in equity S$ Capital Accumulated Share capital Group reserve (losses)/profit Total Balance at 1 July ,405,906 (589,999) 2,987,751 11,803,658 Dividends paid - - (1,215,000) (1,215,000) Total comprehensive income for the period - - 1,001,732 1,001,732 Balance at 31 December ,405,906 (589,999) 2,774,483 11,590,390 Balance at 1 July ,888,165 (589,999) 1,948,660 8,246,826 Issuance of ordinary shares pursuant to the Placement, net of Placement expenses capitalised 2,517, ,517,741 Total comprehensive income for the period , ,528 Balance at 31 December ,405,906 (589,999) 2,859,188 11,675,095 Company Balance at 1 July ,405, ,000 1,694,835 11,310,741 Dividends paid - - (1,215,000) (1,215,000) Total comprehensive income for the period - - (217,788) (217,788) Balance at 31 December ,405, , ,047 9,877,953 Balance at 1 July ,888, ,000 (373,969) 6,724,196 Issuance of ordinary shares pursuant to the Placement, net of Placement expenses capitalised 2,517, ,517,741 Total comprehensive income for the period - - 1,986,011 1,986,011 Balance at 31 December ,405, ,000 1,612,042 11,227,948 The Company undertook a share placement exercise (the Placement ) whereby 6,000,000 new ordinary shares were allotted and issued to Mr Goh Khoon Lim at a subscription price of S$0.42 per share on 14 October (d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. Number of shares Issued and paid-up share capital (S$) As at 1 July ,000,000 9,405,906 Additional shares from Share Split 324,000,000 - Balance at 31 December ,000,000 9,405,906 On 31 August 2015, the Company announced a proposed share split of every one existing share held by shareholders of the Company into three (3) shares (the Share Split ) which resulted in the Company having a share capital of 486,000,000 shares, the listing of which had commenced with effect from 9.00 a.m. on 2 October Page 6

7 There were no outstanding convertibles or shares held as treasury shares as at 31 December 2014 and 31 December (d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year. As at Total number of issued shares excluding treasury shares 486,000, ,000,000 1(d)(iv) A statement showing all sales, transfers, disposals, cancellation and/or use of treasury shares as at the end of the current financial period reported on. Not applicable. 2. Whether the figures have been audited, or reviewed and in accordance with which auditing standard or practice. The figures have not been audited or reviewed by the auditors of the Company. 3. Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of a matter). Not applicable. 4. Whether the same accounting policies and methods of computation as in the issuer s most recently audited annual financial statements have been applied. The Group has applied the same accounting policies and methods of computation in the Group s financial statements for 1H2016 as its most recently audited financial statements for the financial year ended 30 June If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change. There are no changes in the Group s accounting policies and methods of computation including any required by an accounting standard. The adoption of the new and revised Financial Reporting Standards (including their consequential amendments) and interpretations is assessed to have no material impact on the results of the Group and of the Company for the half year ended 31 December Page 7

8 6. Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends. Earnings per ordinary share ("EPS") Unaudited 1H2016 Group Unaudited 1H2015 Profit attributable to owners of the Company (S$) 1,001, ,528 Weighted average number of ordinary shares after adjusting for Share Split 486,000, ,456,522 EPS - Basic and diluted (cents) after adjusting for Share Split On 31 August 2015, the Company announced a proposed share split of every one existing ordinary share held by shareholders of the Company into three (3) shares (the Share Split ) which resulted in the Company having a share capital of 486,000,000 shares, the listing of which had commenced with effect from 9.00 a.m. on 2 October For comparative purposes, the weighted average number of ordinary shares for 1H2016 and 1H2015 has been adjusted for the Share Split. The computation of the weighted average number of shares for 1H2015 also takes into account (i) the post-ipo share capital of 75,000,000 shares, (ii) the allotment and issuance of 6,000,000 new ordinary shares to Mr Goh Khoon Lim pursuant to the Placement, and (iii) as adjusted for the share split of every one existing share held by shareholders of the Company into two (2) shares which was announced by the Company on 5 December 2014, and which resulted in the Company having a share capital of 162,000,000 shares, the listing of which commenced with effect from 9.00 a.m. on 22 January For the purpose of this announcement, the weighted average number of shares after the Share Split may not be a product of the weighted average number of ordinary shares before the Share Split and the Share Split ratio due to rounding. The basic and diluted earnings per share were the same for 1H2016 and 1H2015 as there were no potentially dilutive instruments as at 31 December 2015 and 31 December Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the:- (a) current financial period reported on; and (b) immediately preceding financial year. Group Company Unaudited Audited Unaudited Audited As at As at As at As at Net asset value per ordinary share based on the number of shares in issue at end of period/year, as adjusted for the Share Split (cents) For comparative purposes, net asset value per ordinary share as at 31 December 2015 and 30 June 2015 has been computed based on the share capital of 486,000,000 shares. Page 8

9 8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. It must include a discussion of the following:- a) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on. Review of the Group s performance We have two major business segments, namely (i) Security Solutions Business, and (ii) Maintenance and Leasing Business. Revenue The Group s revenue increased by approximately S$1.2 million or 20.5% from S$5.8 million in 1H2015 to S$7.0 million in 1H2016. Revenue from the Security Solutions Business increased by approximately S$1.0 million or 29.4% from S$3.4 million in 1H2015 to S$4.4 million in 1H2016. This was mainly attributable to the increase in:- a) the sale of security products due to increased demand for Acoustic Hailing Systems by customers in the Rest of Southeast Asia and the increased demand for integrated security solutions by customers in Singapore in aggregate of S$4.0 million; and b) partially offset by the decrease in the sale of security products in aggregate of S$3.0 million due to decreased demand for Acoustic Hailing Systems by customers in Indochina 2, decreased demand for security products by customers in Singapore and the absence in 1H2016 of the supply of parts for Border Security Equipment to customers in the Rest of Southeast Asia. Revenue from the Maintenance and Leasing Business increased by approximately S$158,000 or 6.6% from S$2.4 million in 1H2015 to S$2.5 million in 1H2016. This was mainly attributable to the increase in:- a) fees earned of S$135,000 from the provision of ad-hoc maintenance support services to customers in Singapore, Indochina and the Rest of Southeast Asia; b) fees earned of S$462,000 in 1H2016 from the lease-and-maintenance contracts entered into with HDB in October 2014, for which the generation of lease income commenced in 1H2016. c) partially offset by the absence in 1H2016 of consultancy fees earned of S$439,000 for work in progress from the provision of security consultancy for the design of an airport security project in 1H2015. Cost of sales Cost of sales increased by approximately S$692,000 or 23.8% from S$2.9 million in 1H2015 to S$3.6 million in 1H2016. This was mainly due to:- a) the increase in sale of security products and integrated security solutions to customers in the rest of Southeast Asia and Singapore; and b) the continued amortisation of the cost of several extended supply contracts that the Group had entered into in early 2015 over the duration of several maintenance support services contracts with several public sector customers in Singapore, the rest of Southeast Asia and Indochina, and with its dealers in Indochina and the rest of Southeast Asia. This arrangement with the Group s supplier ensures its customers of the availability of maintenance support from its supplier over the duration of the maintenance support services contracts and ensures that this support would be rendered at a fixed cost to it. Rest of Southeast Asia includes Malaysia, Brunei, Indonesia, Philippines and Timor Leste. (2) Indochina includes Myanmar, Thailand, Laos, Cambodia and Vietnam. Page 9

10 Gross profit Gross profit increased by approximately S$494,000 or 17.2% from S$2.9 million in 1H2015 to S$3.4 million in 1H2016. Other operating income Other operating income decreased by approximately S$101,000 or 34.2% from S$296,000 in 1H2015 to S$195,000 in 1H2016. This was mainly due to the absence in 1H2016 of reversal of allowance for inventories obsolescence of S$99,000 recorded in 1H2015, from the sale of security products which were previously fully written down. Administrative expenses Administrative expenses increased by approximately S$315,000 or 15.1% from S$2.1 million in 1H2015 to S$2.4 million in 1H2016. This was mainly attributable to the increase in:- a) directors and employees remuneration and benefit expenses of S$248,000 mainly due to the annual salary increments and increase in headcount; b) professional fees incurred attributable to the Share Split and the proposed acquisition of shareholding interests in Yatai Security & Communications Pte. Ltd. and Avac Systems Pte. Ltd. of approximately S$42,000; c) office related expenses of approximately S$72,000; and d) partially offset by the decrease in distribution and marketing expenses of S$47,000. Other operating expenses Other operating expenses remained relatively stable at S$15,000 in 1H2015 and S$18,000 in 1H2016. Finance costs Finance costs increased by approximately S$8,000 or 60.7% from S$12,000 in 1H2015 to S$20,000 in 1H2016. This was mainly attributable to the higher utilization of trade financing facilities, which was in line with the increase in revenue. Income tax expense Income tax expense decreased by approximately S$25,000 or 18.8% from S$132,000 in 1H2015 to S$108,000 in 1H2016. This was mainly attributable to the timing differences between the tax and accounting depreciation of the plant and equipment that the Group owns, the utilization of tax losses of holding company under the group tax relief system and corporate income tax (CIT) rebates pursuant to the Singapore government s Budget Profit for the period As a result of the above, profit for the period increased by approximately S$91,000 or 10.0% from S$911,000 in 1H2015 to S$1.0 million in 1H2016. Page 10

11 Review of the Group s financial position Current assets Current assets increased by approximately S$655,000 from S$14.0 million as at 30 June 2015 to S$14.7 million as at 31 December The increase in current assets was mainly due to the increase in:- a) trade receivables of S$2.9 million mainly due to higher sales made on credit terms from the Security Solutions Business towards the financial period end and which had remained outstanding as at 31 December 2015; b) other receivables of S$565,000 mainly due to working capital loans provided to the main contractor for certain software development and maintenance projects amounting to S$350,000 and deferred expenditure pertaining to prepaid sub-contracting costs for the maintenance support services that the Group provides of S$215,000 approximately; and c) partially offset by the decrease in cash and cash equivalents of S$2.5 million due to the payment of dividends of S$1.2 million and the decrease in inventories of S$386,000 due to decrease in purchase of parts and components. Non-current assets Non-current assets decreased by approximately S$405,000 from S$6.1 million as at 30 June 2015 to S$5.7 million as at 31 December The decrease in non-current assets was due to the net decrease in plant and equipment primarily attributable to depreciation charges. Current liabilities Current liabilities increased by approximately S$531,000 from S$7.8 million as at 30 June 2015 to S$8.3 million as at 31 December The increase in current liabilities was mainly due to the increase in:- a) trade payables of approximately S$665,000 due to suppliers which had remained outstanding as at 31 December 2015; b) other payables of approximately S$107,000 mainly due to an increase in advances from customers of S$89,000 in relation to deposits placed on sales orders; c) increase in income tax payable of S$57,000; and d) partially offset by the repayment of bank borrowings of S$300,000. Non-current liabilities Non-current liabilities decreased by approximately S$68,000 from S$604,000 as at 30 June 2015 to S$536,000 as at 31 December This was mainly due to the repayment of bank borrowings of S$108,000, which was partially offset by the increase in deferred tax liabilities of S$39,000. Capital and reserves The decrease in capital and reserves from approximately S$11.8 million as at 30 June 2015 to $11.6 million as at 31 December 2015 was mainly due to dividend payments amounting to S$1.2 million in relation to dividends declared in respect of FY2015, partially offset by the profits from 1H2016 of S$1.0 million. Page 11

12 Review of the Group s cashflows Net cash from operating activities In 1H2016, the net cash used in operating activities was approximately S$717,000, which consisted of operating cashflows before working capital changes of S$1.6 million, net working capital outflow of S$2.3 million, income tax paid of S$11,000 and interest received of S$5,000. The net working capital outflow arose mainly from the following:- a) an increase in trade receivables of S$2.9 million mainly due to higher sales made on credit terms from the Security Solutions Business towards the financial period end and which had remained outstanding as at 31 December 2015; b) an increase in other receivables of S$566,000 mainly due to working capital loans provided to the main-contractor for certain software development and maintenance projects amounting to S$350,000 and deferred expenditure of S$215,000 pertaining to prepaid sub-contracting costs for maintenance support services that the Group provides; c) partially offset by a decrease in inventories of S$405,000 mainly due to the decrease in purchase of parts and components; d) partially offset by an increase in trade payables due to suppliers of S$665,000; and e) partially offset by an increase in other payables of S$108,000 mainly due to an increase in advances from customers of S$89,000 in relation to deposits placed on sales orders. Net cash used in investing activities Net cash used in investing activities amounted to approximately S$48,000 in 1H2016 mainly due to the purchase of information technology equipment. Net cash from financing activities Net cash used in financing activities amounted to approximately S$1.6 million in 1H2016 mainly due to the payment of dividends amounting to S$1.2 million and the repayment of bank borrowings and finance leases in aggregate of S$405, Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. Not applicable. 10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. The security products and solutions industry is generally dependent on factors such as actual or perceived threats from terrorism, civil and political unrests, government budgets and general economic conditions. According to the latest Global Terrorism Database by the National Consortium for the Study of Terrorism and Responses to Terrorism ( START ), there have been more than 140,000 cases of transnational and international terrorist incidents from 1970 to The recent bombings in Thailand and the attack in Paris as well as the continued threat of the Islamic State of Iraq and Syria ( ISIS ) militant group, especially with the recent attacks in central Jakarta, continue to fuel security concerns. The Group believes that it is well-positioned to benefit from the heightened security tensions and that the demand for security products and integrated security solutions will continue to rise in the Page 12

13 long term. The Group continues to broaden its range of security products and integrated security solutions while ramping up its marketing efforts in the Asia Pacific. As announced on 14 December 2015, the Group received a US$64.46 million letter of award ( LOA ) for the sale of one of its best-selling products, the Hyperspike Acoustic Hailing Devices ( AHD ) and their supporting accessories for delivery to a customer in Southeast Asia. This is the largest LOA that the Group has received to date. The Group also saw traction with some of its newer product additions. For example, as announced on 1 December 2015, the Group was appointed as a subcontractor for the deployment and maintenance of Bio-Nexus Ltd s Care-Nexus software system at the Visy Group s Chicago site ( Visy Project ) as well as at 15 additional sites of the Visy Group. The project value of the Visy Project for the first of three modules is US$600,000. In order to boost its security business and expand its Singapore market presence, as announced on 29 October 2015, the Company entered into a memorandum of understanding ( MOU ) for the proposed acquisition of a shareholding interest in Yatai Security & Communications Pte. Ltd. and Avac Systems Pte. Ltd., respectively. The proposed acquisitions are expected to enhance the Group s growth potential as it continues to build up its portfolio and strengthen its geographical footprint within and beyond its current markets. The Group also plans to roll out the first set of product trials for customer review and approval of the Hyperwhistle, a high decibel traditional form whistle which aims to be the smallest and loudest whistle in the world, before moving to full production. This is part of the joint collaboration with United Tactical Systems, LLC. ( UTS ) and Wattre Corporation ( Wattre ) as announced on 23 December 2014 for the development, manufacturing, marketing and sale of the Hyperwhistle. In order to increase the market liquidity of the Company s shares, while broadening its shareholder base and providing greater affordability and accessibility for investors to participate in the equity of the Company, the Company completed a share split of every one existing ordinary share in the capital of the Company held by shareholders of the Company into three (3) shares. As at the date of listing of the split shares on 2 October 2015, the Company had an issued and paid-up share capital of approximately S$9.4 million comprising 486,000,000 shares. Global Terrorism Database is an open-source database including information on terrorist events around the world from 1970 through 2014 (with additional annual updates planned for the future). Link: Dividend (a) Whether any interim (final) ordinary dividend has been declared (recommended) No. (b) Any dividend declared (recommended) for the corresponding period of the immediately preceding financial year? Name of dividend: Dividend type: Dividend rate: Tax rate: Ordinary cash dividend Interim for 1H cent per ordinary share One-tier tax exempt (c) Date payable Not applicable. (d) Books closure date Not applicable. Page 13

14 12. If no dividend has been declared (recommended), a statement to that effect. Not applicable. 13. If the group has obtained a general mandate from shareholders for IPTs, the aggregate value of such transactions as required under Rule 920(a)(ii). If no IPT mandate has been obtained, a statement to that effect. The Group does not have a general mandate from shareholders for IPTs pursuant to Rule 920(a)(ii) of the Catalist Rules. 14. Use of Share Placement Proceeds The net proceeds from the Placement of approximately S$2.5 million (the Net Proceeds ) have been utilised as follows:- (S$'000) Allocation of Net Proceeds Reallocation of the use of Net Proceeds Net Proceeds utilised as at the date of this announcement Balance of Net Proceeds as at the date of this announcement To develop the new secured Virtual Healthcare Systems and Solution business as well as for capital expenditure on service centre facilities relating to the Hyperspike AHD business 1,689 (700) Working capital (1,500) - Net Proceeds 2,489 - (1,500) 989 The Board wishes to inform shareholders that of the S$1.7 million of the Net Proceeds initially allocated to develop the new secured Virtual Healthcare Systems and Solution business as well as for capital expenditure on service centre facilities relating to the Hyperspike AHD business, it considers it to be in the best interests of the Company and its shareholders to reallocate S$0.7 million for working capital purposes as the Group had been able to make arrangements with the relevant suppliers for the use of their relevant equipment required to support its service centre facilities for the Hyperspike AHD business. Please refer to the Company s announcement dated 26 September 2014 for further details on the Placement and the use of Net Proceeds. The Company will make periodic announcements on the use of the Net Proceeds as and when the funds are materially disbursed. 15. Confirmation by the Issuer pursuant to Rule 720 The Company confirms that it has procured undertakings from all of its Directors and executive officers as required under Rule 720 of the Catalist Rules. 16. Negative confirmation by the Board pursuant to Rule 705(5) The Board hereby confirms that, to the best of its knowledge, nothing has come to the attention of the Board, which may render the unaudited financial statements of the Group for 1H2016 to be false or misleading in any material aspect. Page 14

15 By Order of the Board Kelvin Lim Ching Song Executive Director and Chief Executive Officer 3 February 2016 Page 15